If you have several debts, the order you pay them off matters. Two popular strategies, avalanche and snowball, both start the same way: pay the minimum on everything, then put every spare pound towards one target debt.
The avalanche method
Target the debt with the highest interest rate first. When it’s cleared, move its payment to the next-highest rate, and so on.
- Pros: always the lowest total interest and usually the fastest overall
- Cons: if your highest-rate debt is also your biggest, it can be months before you clear anything
The snowball method
Target the debt with the smallest balance first, whatever its rate.
- Pros: quick wins. Clearing a debt completely early on is motivating, and you have fewer payments to manage
- Cons: you pay more interest, sometimes a lot more
A worked example
Three debts with a total budget of £700 a month: a £6,000 credit card at 27.9%, a £1,500 card at 19.9%, and a £9,000 car loan at 7.9%.
| Strategy | Debt-free in | Total interest |
|---|---|---|
| Avalanche | 28 months | £3,037 |
| Snowball | 29 months | £3,236 |
Here the avalanche saves £199, because the big credit card is also the most expensive debt.
Which should you choose?
Choose the method you’ll stick with. Research on real borrowers suggests motivation matters. People who get early wins are more likely to finish. A practical compromise is to:
- clear any very small balances first (quick win, fewer bills), then
- switch to avalanche for the rest.
Make the plan work harder
- Balance transfers. Moving high-rate card debt to a 0% deal can cut interest dramatically. Watch the transfer fee (2–4%) and the end date.
- Stop adding new debt. Keep a small emergency fund so surprises don’t go on a card.
- Use windfalls. Put tax refunds, bonuses and gifts straight on the target debt.
- Review subscriptions and bills. Every £25 a month freed up shortens the plan.
Minimum payments are a trap
Card minimums are usually 1% plus interest. Paying only the minimum on a few thousand pounds can take more than a decade and double the cost. The FCA’s persistent debt rules now require card providers to step in when you’ve paid more in interest and charges than capital for 18 months.
Build your plan
Once you’re debt-free, redirect the same payment into the savings calculator to see how fast it grows. If car finance is one of your debts, compare deals first with the car finance calculator.
Enter your debts in the debt payoff planner. It shows your debt-free date, compares both strategies, and gives you a month-by-month payment plan you can download. If your budget can’t cover the minimums, contact a free debt charity such as StepChange or National Debtline.
Common questions
Which debts should I pay off first?
Priority debts first: mortgage or rent, council tax, energy, court fines. Then high-interest credit like cards and overdrafts.
Does paying off debt improve my credit score?
Lower balances and on-time payments usually help over time, and can improve how much a lender will offer on a mortgage.
Is a debt consolidation loan a good idea?
Only if the rate is lower and you don’t run the cards back up. Model it as one debt in the debt payoff planner.
Should I save while paying off debt?
Keep a small emergency fund, then focus on debt. Once clear, redirect the same payment into savings with the savings calculator.
This guide is general information, not financial or tax advice.